Canadian Royalties still seeks funds for Quebec nickel mine

TORONTO (miningweekly.com) TSX-listed Canadian Royalties is in ongoing talks to secure project financing for its Nunavik nickel mine, in Quebec, but is going ahead with its plan to scale back activity at the site until the funding has been arranged, the firm said on Wednesday.

“Discussions and negotiations are ongoing and strategic alternatives are being considered,” with respect to project financing, the company said.

The firm had indicated earlier that it expected talks with BMO of Canada and Australia's Commonwealth Bank to go on at least until September 30.

Canadian Royalties announced in August that it would scale back construction of the Nunavik project, which had been scheduled to start production in 2010, after delays in raising project finance for the mine.

At that time, the company shifted its focus to complete essential infrastructure at Nunavik and to prepare the site for a temporary shutdown.

The company is gradually reducing the number of workers on site, and the winter caretaking team is now expected to be in place in the last week of October.

Adding to its woes, Canadian Royalties is embroiled in a dispute with its partner on the property, Nearctic Nickel Mines, and has also not been able to reach an agreement with Xstrata Resources over the use of an airstrip owned by the larger company, after Canadian Royalties did not receive regulatory permission to build its own airstrip.

However, the negotiations with Xstrata, which owns and operates the nearby Raglan nickel mine, have been put on ice until financing discussions have been wrapped up, the company said on Wednesday.

Once in production, the Nunavik mine is expected to produce about 30-million pounds of nickel, 40-million pounds of copper, 1-million pounds of cobalt, 15 000 oz of platinum and 80 000 oz of palladium a year.

The project is expected to cost C$465-million.